References

Forms

Schedule K-1

Schedule K-1 (Form 1065) is a form that partnerships and LLCs must complete and send to their partners / members. The purpose of the form is to clearly show each partner’s share of profits / losses from the business as well as each owner’s capital account balance. Completed schedule K-1s for each LLC member (in an LLC) or partner (in a partnership) must be included with your completed Form 1065 when you file your LLC or Partnership return with the Federal Government.

On Part III of Schedule K-1 you can report your business income on line 1. You do not need to worry about most of the other fields in Part 3, as a webmaster or freelancer, you do not have any rental income or qualified dividends (Unless you’re off investing business money into stocks, bonds, etc). If you sold your website or business, you must report your share of the capital gains tax on Part 3 line 8 if its a short term gain and line 9 if its a long term capital gain.

Schedule K-1 (Form 1065) applies to Partnerships and LLCs. S-Corporations must use Schedule K-1 (Form 1120S) while C-Corporations must use Schedule K-1 (Form 1120). Sole proprietorships do not complete any Schedule K-1s, as they have only one owner.